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Year End Tax Planning with Jamie Trull - Alternate title: Make your kid a millionaire!
Are your year-end tax preparations causing you sleepless nights? What if I told you there are strategies to transform this dreaded task into a source of growth for your business? Today, we are joined by the brilliant Jamie Troull, a financial literacy coach, and profit strategist who shares her journey from a corporate CPA to becoming a champion of financial education for small businesses.
We navigated through the process of tax planning, not just as a compliance practice but a strategic tool for business growth. She shared her unique experience on how the pandemic led to a strategic pivot in her business, causing the exponential growth of her Facebook group from 5,000 to 30,000 members.
Jamie offered practical tips on how to maximize write-offs, understanding deductions and the brilliant strategy of hiring your kids. 🏆
Towards the end, we dissected the significance of understanding business books and write-offs. Jamie's insights on how to use documents like profit and loss statements and balance sheets to make informed decisions were spot on.
Also, we played a little game of tax deductions for subscription box businesses, from the importance of having a business bank account to the best way to document expenses.
Whether you're just starting out or running a successful subscription box business, this episode is packed with nuggets of wisdom that will empower you to take control of your financial future. Tune in, and let's conquer those tax fears together!
Links:
- Jamie's video on hiring your kids
- Hiring Your Kids Toolkit
- Follow Jamie Trull on Instagram
- Jamie's S Corp Toolbox
- Jamie's P&L template
Some of the links above may be affiliate links.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
So you want to launch a subscription box and don't
know where to start?
Girl, you are in the rightplace.
I'm Julie Ball and I'm ReneeGonzalez, your host here at
Subscription Box Basics, apodcast for new and aspiring
subscription box entrepreneurswanting to avoid overwhelm.
So grab a coffee, some pen andpaper and let's have some fun.
(00:21):
Hey everybody, and welcome backto Subscription Box Basics.
Today I have a special guest, myfriend Jamie Troll, who is a
financial literacy coach andprofit strategist.
I know that's a mouthful, butshe has got so much good advice
for you.
So listen up, grab your pen andpaper, because we're going to
talk about end of year taxplanning.
(00:42):
So sexy, I know, jamie.
Welcome to the podcast.
Thanks, I think everybody justtuned out.
They were like no, not for me,I'm going to skip this one.
Stay around, do not skip thisone Like this one could have
major implications in yourbusiness.
Real quick story before westart.
I remember the first year in mysubscription box business.
(01:03):
I did not have someone like youin my corner and I was actually
in the process of switchingaccountants and a lot of things
fell through the cracks duringthat time and, for the first
time ever, I had a decentlylarge tax bill to pay.
It was five thousand dollars,and I was like I don't have five
(01:24):
thousand dollars in my backpocket.
So that's why it's so importantto plan ahead and to get
yourself organized, and that'swhy Jamie's here.
All right, jamie.
So some of our listeners willbe meeting you for the first
time, so why don't you give thema little bit of background?
So I'm Jamie Troll.
I was a CPA in what I considera former life.
I'm still a CPA, but I don'tpractice and I don't usually
(01:46):
like throwing around the letters.
I like financial or profitstrategist is my favorite title
that I like to go by now, but Iworked in the corporate world
for a long time for Coca Cola,one of the biggest brands in the
world, and after having kidsand going through that whole
rigmarole that maybe a lot ofyour listeners had as well, I
(02:07):
discovered that the corporatelife wasn't right for me and
decided to strike out on my own,and I'd love to say that I had
some grand plan for what thisbusiness was going to be, but
let me tell you I had literallyno idea.
This is 2017 and I'm like Idon't know what I'm going to do,
but I just started working withsome small businesses in my
(02:29):
area and then that grew and grewand I found that I loved kind
of the strategic side offinances a little bit more than
the CPA boring stuff, and so Iswitched my business to being
just CFO services and theneventually ended up down the
line of becoming an educator,because I realized that there's
(02:51):
just a hole in education.
I really think, with reallyaccessible financial education
for small business owners.
There's just not a lot of it,right, and so I think it leaves
a lot of people just feelingconfused, feeling overwhelmed,
feeling like they're missingsomething Right, and that's what
I really wanted to feel.
And it also helped me to beable to stay at home with my two
(03:12):
kiddos, who are currently nineand six, and that was really
important to me too.
So it really has becomesomething I never could have
dreamed of.
I've been able to grow my teamand this business has just
really evolved over time tobecome it's a labor of love.
I feel the aren't all smallbusinesses.
I swear they really are.
Yeah, they are.
I've been following you foryears now, but we tell the quick
(03:37):
story of I feel like a lot ofsubscription boxes or just small
businesses happen by accident,like something just happens,
where it's like this eitherlight bulb moment or based off
of something that we are goingthrough as the business owner.
Now take us back to thepandemic and the whirlwind of
things happening.
And you started a Facebookgroup.
(03:57):
Tell that quick story.
Yeah, so that was crazy.
And that's when the trajectoryjust went off the charts, which
at the time I was not at allready for.
Remember, we talked about thisand you were just like this is
going out of control.
It was like it was drinking outof a fire hose.
When the whole world was shutdown, I felt like I was in
overdrive, but I had already.
(04:18):
I had started teaching and Iactually just finished up my
first course launch and I waslike, ok, I'm going to take a
little bit of time to regroup alittle bit.
And then the world shut down.
I'm like, ok, well, maybe I'lldo some like organizational
projects.
And I had already offloadedmost of my one to one clients at
that point because I knew Ireally wanted to pursue just the
education, courses, tools,things like that, resources for
(04:41):
small business owners.
And then Everything shut downand then all the new things
coming out from the federalgovernment around the cares act
and the PPP loans and the idealoans and all these acronyms
that didn't exist Three yearsago, right, are now a part of
our daily vernacular.
(05:02):
And at that point in time I gota lot of questions.
I had started a Facebook group,probably about nine months
earlier.
That was pretty engaged, butnobody wanted to hear about
profit strategy anymore, right.
When your business is closed,you're not like, oh, let me hear
about how to increase my profitmargins.
I don't have profit margins, Iam not making any money right
(05:23):
now, right, and I really justleaned into the moment.
And I think that's one of thebig learnings I had is,
sometimes you just have to leaninto the moment and just say, ok
, what does this require of meright now?
And so I was live pretty muchdaily for about six months.
As things were changing soquickly and there wasn't a lot
(05:43):
of information, you couldn't goto YouTube and search up
anything about PPP loans.
I was like, well, I'll juststart a YouTube channel.
And so it just grew really fastand we ended up growing.
I think my Facebook group hadmaybe 5,000 members in it before
the pandemic and we hit 30,000within a couple of months, and
(06:03):
that was by no marketing, noadvertising.
It was just people invitingfriends, and we grew a YouTube
channel from zero to like 20,000followers in a month and a half
.
So it just people wereresponding, so I just kept
showing up and doing that.
It feels like a little bit of afever dream now looking.
That's funny.
Well, all of COVID feels thatway.
(06:25):
You were providing really goodinformation and you're really
relatable.
You were very helpful and thoseare the things that any small
business owner needs to do.
Now, from a timing perspective,the education that you were
providing the live videos andstuff was very timely.
People needed this informationquickly and so I think you did
(06:47):
such a great job.
But here we are several yearslater and you're still a course
creator and teacher and you'rehelping small businesses.
So I love your kind of storybehind the scenes.
It almost feels like anaccident that you started this
business and grew it to whereyou're at now, but I'm super
proud of you.
I know I just love to see thisgrowth.
(07:09):
So let's dive into some taxplanning stuff Now.
Before we jumped on thispodcast episode, you and I were
chatting and you said I like tolook at tax planning in two
different perspectives.
Let's tell everyone that.
So they wrap their heads aroundthat, yeah, absolutely, and I
think oftentimes it.
And when we first are startinga business, too, we think of
(07:30):
taxes as really this complianceexercise, ie the thing that we
have to do, right that, oh mygosh, I have to get my books
ready for taxes, I have tofigure out my revenue and my
expenses and my deductions anddo all of this work and make
sure that I've trackedeverything and that I'm not
going to get in trouble with theIRS.
That's usually like our bigconcern and that's one way to
(07:53):
look at our numbers in ourbusiness is we have to do this
for tax purposes because wedon't want to get in trouble.
But then the other side ofthings and this is what I love
to teach on the most is thestrategy part of it, which is
really the things you get to do,the information that your
numbers give you.
If you have your numbers, ifyou're keeping up with them, not
(08:14):
only are you going to be readyfor taxes, but you're also going
to have the information to know, like how is my business really
doing?
What changes do I need to make?
You're going to have real-timeinformation to make those
decisions, to know what yourprofit margins are, which in a
subscription box business, isperhaps a freaking, lutely
critical right.
It's very easy I'm sure Julieknows this.
It's very easy to work for nomoney or less than no money
(08:37):
right To lose money in thebusiness, and so you have to be
so on top of things.
But that's more the strategyside.
So I think all of that, inorder to be successful both on
the compliance side and thestrategy side, it means having
your numbers together andorganized in a way that you can
look at them and understand whatthey're telling you and make
decisions right.
So that's a good segue intolet's give them some good advice
(09:02):
here.
Let's talk about organizing.
I feel like every year I alwayshave a meeting with my
accountant in Q4, and then shewaits for me to send all my tax
documents and all my information, and I always feel like I carve
out a day and then I pulleverything together and put it
in a pretty little bow for herand I send it off, and then I
(09:23):
hold my breath and I'm like letthe head ins wait to see what
she has to say, and I rememberyears and years where I would
take a picture of my tax daylike my tax organizing day, and
I just had papers everywhere,all over the floor and I'd have
post-it notes and I keptthinking to myself there's got
to be a better way to do this.
So give us some of your tips onyear-end tax planning and
(09:47):
getting organized for it.
And I first want to humanizeand say literally no one is
fully organized.
So if you're in that place of,I never feel organized.
I always feel like things arecrazy.
Even the best of us who do thisfor a job my own taxes I still
have scramble days.
(10:07):
Most of the time I have thethings I need in place, but I
still am like, oh shoot, I gotto pull those receipts and make
sure that I have those ready andhandy.
So don't ever.
I always want to make surepeople don't feel that shame,
because shame keeps us frommaking change right.
It sometimes allows us.
Well, I don't want to feel that, so I'll just hide my head in
(10:28):
the sand a little bit and maybeit'll go away.
And unfortunately, with taxes,as much as I wish one day we
would wake up and they weren'ton a thing, they are always
going to be a thing and forsmall business owners they are
always going to be a thorn inthe side, even if you are
organized and prepared.
But what we can do right is notlet perfect be the enemy of
good.
Don't think I need it's perfectsystem.
(10:49):
That's going to make it justautopilot and easy.
There are things we can do tomake it easier.
That's the goal is easier.
So I think, if you're in this iscoming out towards the end of
the year, that this is the time.
The big thing to wait, one ofthe big things for organization
is don't wait until January,february, march, april.
(11:10):
My friends yeah, I was going tosay the day before they're due
To start this process becauseagain, it's going to make it
less of.
We want to make it not so muchof a tizzy.
You're going to miss things.
You're going to miss things.
If it's a tizzy.
You're going to miss deductions.
You're going to miss importantdocuments that you need.
That's just the way the worldworks, right, when we're rushing
(11:34):
on something, it's not going tobe as good of quality as if we
take our time with it a littlebit.
I also think we're walking intoplanning season for the next
year If we look at getting ourtax.
If you're just looking at it, Igot to do this for taxes.
You might wait till April,right?
But if you're looking at this,as this is really helpful
(11:54):
information for me to be able toplan a successful next year,
then use that as the motivationto get started getting things
together.
That is going to be a much morepowerful motivation.
That is way more exciting.
That's what I do.
I have to trick myselfpsychologically and say no, no,
I'm doing this because I want toplan next year's best year ever
(12:14):
Our goals and everyone lovesdoing goals and high level
things but we also need to start.
You can't walk in to do goalsetting until you've looked at
the past year.
You want to jump into next yearand be like let's not think
about this year, let's go tonext year.
But there's so much gold andincredible information in your
numbers for this year.
(12:34):
Even if you don't know exactlywhat you're looking at, you're
going to be able to draw andthings from it.
You're going to be able to havesome aha moments, as we call
them, where you'll be like, oh,I didn't think about that or oh,
I want to dig into this more.
That's going to really help youto see, okay, what's going well
, what do I need to change?
Reflecting back on okay, say,april was a really good month,
(13:01):
but why?
You wouldn't even know Aprilwas a good month unless you look
back at those numbers, andthat's another thing.
For Texas, you only need annualnumbers.
For making strategic decisions.
Those monthly numbers are socritical.
So I always have a monthly P&Lthat I'm looking at, because
that's the thing.
If you're looking at numbers ina vacuum, they don't mean
(13:22):
anything.
But when you're comparing them,when you have that comparative
period to say, okay, I'mcomparing this time versus last
month, or this month versus thesame month last year, that's
going to give you way moreinformation.
You're going to be able to drawa lot more thoughts and things
to dig into from that and get alot more useful observations.
(13:45):
So again, I think people arelike I don't know what I'm
looking at when I'm looking atmy P&L, but I don't even know
what I'm looking at.
Well, if you just look at itcompared to another one, it'll
give you a lot of those oh waita second, why were expenses up
here?
Why was revenue up here?
What was going on then?
And you could see and reallydraw those conclusions.
So I do think that reflectingtime period is so critical to
(14:09):
being able to walk forward andtruly plan a year and have some
actual meat and potatoes behindwhat you're doing and not just
have these airy.
We made $200,000 last year butwe're going to make $2 million
next year, right, well, how areyou going to get there?
Wow, yeah, exactly.
And I think, as it relates tosubscription boxes, unless you
(14:30):
have a replenishment style boxwhere you're sending the same
thing every month, you can lookat your product budget each
month.
You're curating a unique set ofproducts almost every month or
every quarter, whatever yourcadence is.
And so if you could look backand be like I was really
profitable in January because Inailed my product budget, but in
(14:51):
February I put in one more itembecause I felt like I needed to
put more in there and youbusted your product budget.
You over-purchased too muchstuff.
That'll be clear in thosenumbers.
But unless you take a minute tolook back at that stuff, then
it's pie in the sky.
Like you said, you can't justthrow a goal out there and not
(15:13):
have a plan to get it.
What do they say?
Plan the work, work the plan.
Okay, let's continue organizing, keep us going.
Yeah, I think if you need toget organized, there's so many
different ways to do that.
I just want to give peoplepermission to find a way that
works for them.
A lot of people will push theirsoftware their thing or whatever
, and for some people, somethinglike QuickBooks Online is a
(15:35):
great thing.
For some people, that isabsolutely not.
For some people, getting abookkeeper makes sense,
especially as you are growing.
If you know that's somethingyou're going to put off right.
If you know it, then getting abookkeeper who can handle this
stuff, that you will just beable to get the output right,
like the information you can usefor strategic purposes, and you
don't have to worry about allthe compliance stuff right, the
(15:56):
categorizing expenses anddealing with invoices all of
that they are handling that canbe a great thing for some people
, especially as you grow.
Okay, before you move on,there's a lot of newbies
listening.
What does it mean when someonesays I have to do my books?
Yes, okay.
So the biggest thing with doingyour books is really.
I like to think of it more froman output perspective, because
(16:18):
that's what you want is onbackside of things, what you're
going to want to have is aprofit and loss statement that
shows you and really all theprofit and loss statement.
I think it sounds fancy, butall it really is showing you
what money came in and whatmoney went in.
And yes, there are some likeweird fancy adjustments that
accountants will do for taxpurposes only, but honestly, it
(16:41):
really jibes with how you thinkabout your business and there
can be some timing things andstuff, but ultimately I like to
just think about it.
At least my P&L is mostly justcash that came in, minus cash
that went out.
Related to the business equalsmy total profit.
That's the most important thingto be getting out of doing your
books right, and ultimately youwant to ensure the accuracy of
(17:05):
that, and so what a bookkeeperwill also do is make sure
they're reconciling your bankaccounts right, and that just
means that, okay, that gives memore confidence that my P&L is
correct, I'm not missinganything, I'm not doubling
revenue somehow, I'm not messingthat up.
And then depending and in thiskind of business you likely
would have a balance sheet aswell that would be part of your
(17:27):
books, but that's not somethingthat actually gets filed for
taxes.
It's really more for you tohave that's if you have
significant assets in yourbusiness, if you have
significant liabilities, assetsbeing potentially inventory.
Right, it's inventory.
Yeah, if you're keepinginventory, that's a balance
sheet item.
That's not something.
Ultimately, you can't writethat off until you sell it
technically, and so that's whyit just sits on this balance
(17:50):
sheet with just like purgatory Ilike to think of it as P&L
purgatory like it's not quitethere yet.
We're just going to sit it overhere and eventually it'll
probably make its way to the P&Lat some point.
So that's how I like to thinkabout when we're talking about
what is doing your books.
It's really just making surethat you have an accurate profit
(18:12):
and loss statement and thenpotentially also an accurate
balance sheet.
Okay, perfect, that's so superhelpful, because you hear that
thrown around all the time andit took me a while starting my
business to really know whatthat means.
And then, when I was ready tohire out anytime I hire out I
want to know the basics of howto do what I'm hiring you to do.
(18:33):
Yes, I totally agree, becauseyou don't know if they're doing
it a good job unless you've atleast done it yourself for a
little bit.
Right, exactly, yeah, I learneda little bit of that.
I think I want to givepermission to people to start
easy right, and one example ofthat is you can use a
spreadsheet at the beginning ofyour business.
(18:55):
Now, eventually, you're probablygoing to want something that
has a little bit morecapabilities and it'll also give
you better reports and thingslike that to help you make
decisions.
But in the beginning, if you'vegot expenses, make sure you're
tracking those, and that mightjust be on a spreadsheet, right,
and I even have one.
I'll have Julie link to it downbelow but you don't have to buy
QuickBooks for 40 bucks a monthAt this point in time.
(19:17):
You can buy a cheap spreadsheetand use it for as long as you
want to, until it becomes timethat, okay, now I need a more
fulsome system, but that'll giveyou a profit and loss statement
right.
There are tools that allow youto do that.
You know what I like aboutmanually using a spreadsheet,
too, is that you're looking atthe numbers, you're typing in
the numbers, and so it helps youget a finger on the pulse of
(19:39):
your business, which I think isimportant at the beginning,
especially because you need tounderstand what's going in,
what's coming out.
Now I did end up gettingQuickBooks online and I did hire
an accountant and her team tohelp me with that stuff, but not
that first year.
I was in there on a weeklybasis updating that so that I
knew In my boot camp.
(20:01):
I've got a planning spreadsheetthat helps you stick to your
product budget, each box andstuff like that, and it gives
you a big picture overview.
But I tracked it on a verybasic P&L spreadsheet to start
with.
Yeah, and I'm a spreadsheetnerd, I love a good spreadsheet.
It's one of the things we makea lot of worksheets in our
programs and also that we justsell kind of one off because
(20:23):
they're really helpful.
But I love to create somethingyou can create.
Our P&L template has dashboardsthat you put the.
It'll take 15 minutes a monthto do this one right and then
you have a monthly P&L.
Now you have dashboards withlike a graph of your top five
expenses.
You have all of that so thatyou can see it and really be
(20:46):
able to make decisions right.
But you don't need to have afancy software for that.
I love it Like Excel does allof these things.
We'll put that link in the shownotes then.
Yes, yes, okay, perfect, shouldwe move on to everyone's
favorite topic write-offs.
Let's do it.
Yes, this is the most fun part.
Okay, talk about what arewrite-offs, and I think the
(21:09):
technical term is deductions,right?
Yes, yeah, tell us what thoseare and then give us some tips
and strategy around that.
It always makes me think aboutthe Schitt's Creek that, seeing
it with David, and they're likeit's a red dog, right, I feel
like I use for it.
So I think that the importantthing to know when we're talking
(21:30):
about tax deductions is and Ithink one of the things in our
heads and I even do this as abusiness I'm like I don't make
decisions the same way whenthey're business deductions, I'm
like, oh, it's a deduction, oh,it's a deduction, right, but
it's free money, I'm sure.
Right, I know it's important toknow.
Right, don't go on a shoppingspree.
Yeah, right, and I do it.
(21:52):
It's more akin to getting, let'ssay, 20% off or 25% off of
something, right, that's what Iwould think of a deduction as,
because what it's doing is it'sreducing the amount that you
need to pay taxes on.
So you're paying taxes, not onthe amount that comes into your
business.
Thankfully, because there arebusiness expenses and the IRS
knows that.
So what you're really payingtaxes on is that revenue minus
(22:15):
those deductible businessexpenses which, truth be told,
for the vast majority ofexpenses that truly relate to
your business, they aredeductible.
There's only a few handful ofthings that maybe there's
special rules around.
But if you're truly doingsomething for your business,
it's probably a deduction, oryou could make the case for it
to be a deduction.
Okay, and so that profit amountis what you're taxed on.
(22:39):
So when you have a taxdeduction, it's reducing the
profit amount that you're beingtaxed on, right?
So if it's not like you justget the money back in taxes, but
a portion of it you get back,it reduces your taxes.
So I like to call it like 20 to25% discount is more the way to
think about deductions.
But again, the other thing tothink about with deductions is
(23:01):
okay, is this really somethingthat's going to help me?
Is this going to be aninvestment?
So I think a lot of timestowards the end of the year we
get a little deduction happy,typically when we know
especially for any year businesswhere we've generated maybe
more than we thought, maybe wehaven't paid it into doing our
quarterly estimated taxes theway that we should and we know
(23:23):
we have a big tax bill, likeJulie you were talking about.
Oh my gosh, I owe $5,000.
That typically happens in thefirst year of like, when your
business kind of has that bigtrajectory upward Right, because
in the past, like the firstyear, you may have to really
worry about taxes because yourdeductions may match your
revenue, right, and so we're notworried about it.
(23:43):
And then we just don't thinkabout it.
And then the first year thatyou see that increase in profit
and you haven't really thoughtabout the tax impact, that's
when it comes back and ithappens to, I would say, 80% of
business owners.
I talk to have this like oh mygosh, you make it feel better.
Yeah, it really is, becauseyou're like oh my gosh, I knew
(24:04):
what taxes, but I didn't reallythink about it.
But if you're listening to this, it's not going to happen to
you because you have all thisbad attitude, exactly, so it
doesn't matter where you are.
Yeah, well, after that firsttime, you I mean I only have to
learn the hard way one time whenit comes to something like that
.
After that, every single month,I had a business checking or a
business savings account that Iwould just drop some money in
(24:27):
there, based off of what ourprofit was that month Exactly,
and that's exactly what Irecommend to do.
I have a whole profit planwhere, basically, it's just
taking the profit in yourbusiness and allocating it into
different buckets.
Some people use like profitfirst.
We have our own kind ofmethodology for that but
ultimately you need to beputting aside money all year
long for taxes and either payingyour estimated taxes or even if
(24:49):
you wait until the end of theyear, like you are going to want
to have that money readilyavailable because otherwise
you're going to be like, well,that money's long gone.
Where am I supposed to come upwith this?
And it happens so often withbusiness owners.
So I want to make sure thatpeople really think about that
and they're being mindful ofwhat that looks like.
(25:09):
Even if you're early on yourbusiness and you're like I don't
have to worry about this yetyou will, and so I don't want
you to have to like learn thehard way, right, just start
putting that money aside.
And the great thing is here's.
What I love about doing is so Itend to over put money aside,
like I will put a little bitmore than I think I actually
need and you can work with a CPAif you want to get really close
(25:32):
to that.
Or you can pick a percentageand that will depend on a lot of
different factors, but Itypically say 20 to 30% in your
business is a good amount ofprofit, not revenue profit to
put aside If you're in a hightax area like California, new
York, maybe a little more thanthat.
I'm in a state with no incometax, so mine's on the lower end,
(25:52):
so it really depends on that.
But the great thing is when yougo to file your taxes and
you're like okay, sometimes I dohave a big bill right, I might
have a bill that's $5,000.
And I'm like but I had seven inthat account and so it feels
like getting a refund eventhough I'm paying $5,000,.
I'm like you know what I'mgonna get to now release that
$2,000 or roll it in next yearor something.
(26:15):
But it feels like you'regetting an instant refund when
you have it prepared and sittingthere.
It's just it's such apsychological game You're paying
the same amount as you wouldotherwise, but you're thinking
about it completely differently.
I agree, when I can, I do thesame thing and I like to think
of it as a moving target Becausea lot of different things
happen throughout the year.
(26:37):
We can look back at the COVIDyears and see all the different
things.
We didn't know there was goingto be PPP loans.
We didn't know there was goingto be other opportunities.
Again, it's a moving target.
And then for the subscriptionbox world, for the majority of
our students and the boxes thatI've seen and known along
through the years, like May,june, july, especially June and
(26:59):
July man, it's such a it's wecall it the summer slump.
You're just not going toexperience as much revenue or
profit in the summer monthsunless you sell some sort of
like summer product, yes, likethe natural kind of seasonality,
yeah, the seasonality of it.
And so that's why I like tothink of it as a moving target.
(27:19):
I don't, I didn't put in thesame amount every single month.
It was based off of okay, howmuch profit did we make this
month Exactly?
And that's how you should do it.
And that's also one of thethings that I have people save
for, especially in a seasonalbusiness like that.
Mine is the same way.
We have a couple of launchesthat bring in more than half of
our revenue in a year, right intwo months, but I can't just say
(27:42):
, well, I'm just going to paymyself a whole bunch more
because I have a team now and Idon't want to get to July and
not have enough money sittingfor payroll.
Right, that will never happen.
My team will never not havepayroll.
I'm never going to be in thatsituation.
So that means that I also put alot of money aside, and there
are different bank accounts youcan use for this in case like.
(28:02):
One thing I also want to say andthis might be a good time to
plug it is make sure you have abusiness bank account, even if
it's just expenses, like you canput your own money in and pay
expenses out of it, but it'sgoing to help you stay more
organized.
So I highly recommend thatthere's one like Novo and Relay,
which are great.
They're free and they allow youthis opportunity to put money
into different buckets.
So that's what I really like.
(28:23):
Yeah, they have reserveaccounts where you can put money
into those different buckets.
I have one of each Novo, andthey're both banking platforms,
so they partner with an FDIC andShared Bank, but they have this
great ability where you can putmoney aside for taxes.
You can put money aside foryour rainy day fund.
You can put money aside toreinvest later into your
business.
(28:45):
You have all these kind ofdifferent, almost like the
envelope method for business,right?
Oh, I love that, yeah, and itmakes it so much easier because
you can just put it away andyou're like okay, now I won't
spend that because it's not inmy like spendable balance, right
, like it allows us to reallybudget, not on like a line item
basis, because I hate that, buton an overall basis.
We have a, we know how muchmoney we have and we know what
(29:06):
we can afford, which is sohelpful, I think, too Super
smart.
Yeah, make sure you do that ifyou don't have a business bank
account.
We're coming up to the end ofthe year.
It's really good to get starteda new year with a business bank
account.
And then, even at the otherthing I wanted to say on the
deductions piece, a lot ofpeople early on in business,
they have expenses before theyhave revenue and they don't.
(29:29):
They're like what am I supposedto do with this for taxes,
right?
What do I do?
Well, you can still write thoseoff for the most part, right?
So you and that can offset anyother income that you have,
right?
So if you have a job, or yourspouse has a job or something,
the expenses in your business,even if you're not making
(29:51):
revenue yet, can offset some ofthose charges.
So that's something to know isdon't just be like, oh, never
mind, I'm just not going toworry about it, right?
If you get $2,000 worth ofexpenses, you can deduct that as
startup costs typically fromyour business and you don't.
That's, that's an extra.
Using 25%, that's a $500 taxsavings because you didn't just
(30:12):
like, say no thanks, I'm notgoing to deal with it, right?
So, even if you're a part ofJulie's membership, right,
that's something that you canwrite off.
I'm just going to say that let'splay a game.
I'm going to name an expense ina subscription box business and
you say yes or no if it's awrite off and then if it's a
(30:34):
gray area, just give us a littlebit of context around that and
I will go.
Disclaimer here I am a CPA, butI'm not your CPA.
Perfect To all listening.
Disclaimer Check with your CPAfor specific details because it
can vary.
But go ahead, julie, let's doit.
So, in general, ok, thephysical boxes that you're going
to send Absolutely yeah Aplastic and sold Postage?
(30:57):
Yep, absolutely OK.
Crankle cut yeah, ok.
Anything you're putting in thatbox, it's going to be a
deduction, ok.
Laptop, yes, I would say with alaptop, one of the things to
keep in mind is you may be ableto deduct it all in one year.
You may put it on your balancesheet as an asset and depreciate
it, but in general, if you'reusing it primarily for work,
(31:20):
usually, yes, you do want todocument that With anything,
especially something that couldbe gray area could be deduction.
It could be personal makingsure you have a documentation
either within your QuickBooks orjust it can be literally a Word
document that you save on yourcomputer and you remember where
it is and you save it in yourtaxes file so you have an
explanation of what those are.
(31:41):
Yep, ok, a template like yourP&L template, for sure.
A course like Subscription Box,bootcamp, for sure.
If it's related to what you'retrying to do, then that is
definitely.
That's considered education, andone of the things I'll say here
is the words the IRS uses fordeductions are ordinary and
(32:01):
necessary, but interestingly,the necessary is the piece that
feels like really well, is thisreally necessary?
The way that they definenecessary is do most business.
Is this normal for the business, right?
So it's not like necessary,like I have to have this or my
business can't run, and I thinkthat's where people get confused
(32:22):
.
I don't know Got it.
It's like the IRS doesn'tactually know the definition of
necessary because they make uptheir own and I'm like maybe
it's a different word, we have awhole dictionary for that.
But in general, if we can justsay this is normal in our
business, it's related to ourbusiness, here's how it's
related, and if it is somethingthat is in the middle and all
having that documentation can bereally helpful.
(32:42):
I've gone to conferences.
That was my next one.
Conferences, yeah, conferencesare one that are really
important to document, to havesomething to say keep the agenda
, maybe have some notes in thereabout how you're planning to
use some of this in yourbusiness, because in general and
nothing's ever a guarantee theIRS can always come back and say
, no, I don't agree with you andyou'll be like, ok, well, fine,
(33:04):
but I think that a lot of timesthere's more that can qualify
than we think.
And so I would say just reallybe thinking about.
There's a portion of your cellphone bill most of the time is
going to be, and you don't haveto get.
Obviously cell phone billsaren't the way they used to be,
where you were charged per calland you could go through.
The laws are written so weirdas if we're supposed to know
(33:28):
what percentage.
We use our phone for businesspurposes.
No, I'm moving the hell nose,but as long as you come up with
some kind of reasonablemethodology, they're going to be
like OK, seems correct, Ideduct a portion of our internet
bill.
I want to mileage on your carthat you're using for business.
If you're driving back andforth to that post office track,
(33:49):
that Love that.
What about your office?
Yes, your home office can counttoo, and that one gets a little
tricky sometimes becausethere's a couple different ways
to come up with a home officededuction and you do need to
make sure it's used exclusivelyfor business.
So if you're working out ofyour living room, and that's not
going to count, but if you havea specific place that is used
for your business and yourbusiness only, then that is
(34:13):
going to be a write off and,depending on how you get to,
that number can depend on do yourent, do you buy and there can
be some complications there.
To talk to your cat yeah, talkto your cat on that.
And don't believe the fact thatthere's this weird I don't know
where this rumor came from.
If you take the home officededuction, it's an audit red
(34:33):
flag.
That is not true at all.
But no, yeah, so don't worrythat.
Oh, and they're going to auditme If I have a home office
deduction.
First of all, audit isn't theworst thing in the world.
I think there's just that scaryooh audit.
But second of all, it reallydoesn't.
That's a very normal deductionto take, so don't feel like you
(34:54):
can't, and definitely talk to aCPA on that one.
So, buying cars and home officededuction, those are good
topics to talk to a CPA onbefore you do anything with them
, because there can be longerterm consequences to whatever
you decide to do this year.
But yeah, so just that thoseare good to have conversations
to get the full picture.
But overall, yes, those wouldbe deductible business expenses.
(35:18):
Every year my accountant asks meOK, where did you do your
business this year?
Where did you run it out ofexclusively?
And so I would give her thesquare footage of my office and
then, when we were running ourwarehouse from home.
We ran it out of a two cargarage, but we didn't use it for
anything else, we didn't use itfor cars, it was exclusively
for the business.
(35:39):
So I would give her the squarefootage of that as well.
So, yeah, that's a really yeah,ok, a couple more.
You hire a contract worker to doyour social media for you?
Definitely OK.
What about if you hire anaccountant?
Absolutely, that's all right,absolutely Right.
Yep, now I will say in theorywell, I'll say this In theory
(35:59):
your accountant, if they're alsodoing your personal taxes, only
a portion would be deductiblethere.
But I argue typically becausenow, especially because we don't
have outside jobs, all of ourpersonal taxes are pretty much
our business.
Again, there's some of thatgray area.
And if you wanted to deduct thewhole thing and just be like,
no, I'm not going to deal withpulling this apart, a lot of
(36:21):
people do that, I'll say that,and this is a donut, but a lot
of people do that, and this is agood place to put that
disclaimer again.
Ask your accountant, becauseyour accountant, different
accountants, have differentlevels of comfortability too.
Right, they're veryconservative accountants and
they're very Maybe it is liberal, not politically, but just in
terms of what they'recomfortable with, and so asking
(36:44):
the person prepping your taxeswhat they think is really
helpful.
Okay, okay, that was a fun game.
Thank you for playing.
I like it.
That was fun.
Let's wrap this up.
I know you have a favorite taxstrategy that so many of us mom
entrepreneurs need to know aboutbut often overlook.
Will you tell us about that one?
(37:04):
Absolutely, I think it's myabsolute favorite and I finally
got a chance to put this intopractice this year myself.
I love the tax strategy ofhiring your kids and a lot of
people.
There's a lot of misinformationin this world of hiring your
kids, but for most people owntheir business fully right.
(37:25):
If you are a 100% owner in yourbusiness, most people can hire
their children at any age towork in their business.
Now they actually have to workright, and that work can be
marketing related.
My son comes on my YouTubechannel and I pay him for that,
and I pay him good money becausehe's making it.
It's a video recording.
It's marketing for me, so I cango out there and see okay, if
(37:48):
my kid was going to be in acommercial, what would I pay
them to be in that commercialand I pay him for different
admin duties and things likethat.
But as long as you pay them,commiserate with what you would
pay somebody else for the samelevel of work, right.
And you can get that through alot of different means, by
searching online for jobpostings and things like that,
and it's reasonable and you'retracking it.
(38:08):
Well.
You can pay your kids.
You get the deduction for thatright.
Your kid on the other side hastypically, depending on their
age, but usually if they'reunder 18, they and you do it.
You send it up correctly.
I'll caveat that as well.
They will have no taxes to pay,especially if they are making
under the standard deduction.
So I think it's 13,000, Ishouldn't have looked at it up,
(38:29):
but I think it's almost $14,000.
So if you pay them less than$14,000 in a year, there will be
no income taxes, no socialsecurity taxes, no Medicare
taxes, no unemployment taxes,any of that.
It changes as they get between18 and 21.
Some of that rolls off and then21 and up, unfortunately, the
benefits typically roll off, butyou can pay them.
They have no taxes.
(38:50):
So you're basically shiftingyour income from your tax
bracket to theirs and I know alot of people that now, instead
of they let their kids, then themoney that they spend on their
kids sports comes out of thatmoney, right?
Oh wow, so money you wouldotherwise be spending anyway,
you could pay out of that money.
So my son gets the majority.
Well, he gets some of the moneythat I pay him, but he's nine.
(39:11):
He doesn't need all that moneyright now.
So what I do with it is I alsouse that money to put into a
Roth IRA on his behalf.
So that's the other great thingyou can do.
You have to have earned incometo put money into a Roth IRA.
And just putting a couplethousand dollars into his Roth
(39:32):
IRA right Each and every yearuntil he's 18, he will have on
average, probably two to $3million when he retires in that
Roth IRA.
Oh my gosh, yeah, so it's my.
Make your kid a millionaire theeasy way, right?
It's all about the time valueof money, and that is one of the
lessons I learned when I wasreally young and when people ask
(39:53):
me like, what's the lesson youwant people to know is, the
earlier you start, the better,and if you didn't, you can for
your kid right, you can makethat happen for your kid, where
you let the time value of thatmoney and you just even invest
in index funds or something.
Hashtag, not a financialadvisor either, right.
But as I pick up my jaw fromthe floor hearing those numbers,
(40:18):
I can think of so many thingsthat, as a subscription box
business owner, your kids couldhelp with a million helping
packing the boxes, or even cleanup after a box packing day,
getting all the crinkle cut offthe floor, or there's just so
many things that your kid couldparticipate in.
And so you told me you have aYouTube video that kind of goes
(40:40):
into this a little more in depth, right, yes, I do.
Okay, so we'll definitely linkthat in the show notes, because
this can be complicated.
You can't just pay your kidsunder the table.
Obviously, like you said, youhave to set it up the right way
for it to be like this strategictax plan.
So, yes, we'll definitely makesure we share those details.
This whole conversation has beenfascinating.
(41:00):
I hope that our listeners havetaken notes and that they've
learned a lot from it too,because, again, this can be one
of those topics that feelsoverwhelming, but you have to do
it.
This is part of running abusiness.
Yeah, absolutely.
And again, I think it can bethat switch of okay I'm going to
think about.
(41:21):
I've been thinking about thisfrom this compliance tax
perspective and what if we makethat mindset shift towards oh no
, this is something that I getto do, I get to be strategic.
It's going to help me meetthose big goals I have for this
business in the future if I canreally understand this and dive
in and feel more comfortablewith the number side of my
business, right, yeah, so ifsomeone's listening and they're
(41:44):
like all right, this issomething I need to invest in.
This is something that I needto learn more about.
You've got a program thatteaches this kind of stuff.
Why don't you tell everybodyabout that?
Yeah, for the hiring of kidsspecifically, and I like to make
tools.
I have some broader thingsabout learning the basics of
finances.
That's something Julie can droptoo.
Yeah, all the way up to yourown CFO strategy.
(42:06):
But I also love to make reallytargeted products that are good
for somebody who is trying toimplement something.
Yeah, but it's complicated andit's going to be thousands of
dollars to talk to an accountantand get them to do it.
They might not even be superfamiliar with this.
Our hiring your kids toolkit isour most popular, actually this
(42:27):
year new product that we've putout.
People are loving it.
I just got a sale while we wereon this recording Because I
think it's really resonatingwith a lot of people that are
like, oh, I want to do this.
I want to do it the right way sothat I get the tax deductions.
I don't want to do anythingshady, right, I want to do it
correctly.
And so this gives all thechecklists that you need, all
(42:51):
the what you're going to need tobe able to track it, so that
you have that for the IRS if andwhen you ever are audited
hopefully never, but you neverknow and it also has contracts
to make it legit.
And I think that's somethingthat people miss in all of this
is you don't want to just giveyour kid money and try to deduct
it because you don't have apaper trail.
(43:11):
So how do we make sure we havethe paper trail?
And that's also important ifyou decide you want to go that
extra step to make your kid amillionaire and open that Roth
IRA, which normally theywouldn't be able to do at their
age, but because they haveearned income from you they can.
So you want to do it all theright way.
You don't want to miss out.
I've talked to so many peoplethat did it the wrong way and
they are missing out on so muchin terms of tax savings or
(43:34):
potential earnings in the future.
So I really wanted people tohave all the tools they needed
to be able to do that themselves.
The hiring a kids toolkitdefinitely check out the link
Julie is going to put in there,because I'm so excited about
this product and we've had somany kids that I love seeing
pictures of these kids, thateverybody's hiring and the work
that they're doing in thebusiness.
(43:55):
We even give you ideas.
For if you're wondering, likewhat is my kid actually going to
be able to do, I can tell you.
Even for young kids, there arethings that they can do,
especially in the areas ofmarketing.
If you're taking pictures andputting them on social media for
your business, you could paythem for that Nice, nice.
So there's so manyopportunities.
This is just pure gold.
I feel like that's what weshould name the podcast episode
(44:17):
Make your Kid a Millionaire.
That's a lot sexier than likeend of the tax plan.
Oh, this conversation has beenso great.
Jamie.
Thank you so much for not onlybeing on the podcast today, but
also for being so intentionalabout what you're teaching
everyone, like making your kid amillionaire and the tax
planning strategies and justdemystifying a lot of this
(44:41):
really scary stuff.
It has such a huge rippleeffect across lives.
So, thank you, I reallyappreciate what you do.
Well, thank you and Julie, Iappreciate your support.
You've been part of this wholesquad for a long time.
I remember meeting you a coupleof years ago when we were in
your town for our retreat, forour team your team retreats,
(45:04):
yeah, and so I just appreciateyou as well, and you were
actually, I think, going inSpirkelhussel.
Grow was one of the firstthings that I did.
You reached out and you werelike, do you want to be a part
of this?
And I was like, yeah, let's doit.
So I loved like you really, Ithink, have been a part of this
(45:25):
how this has evolved and changedover time, and so I'm so
appreciative for you too andyour friendship.
Aw, what a little gush festhere we're having, I know right.
So let's wrap it up, jamie,again thank you.
We're going to make sure that weput all of the links in the
show notes so people can checkout your workshops, your course,
your YouTube videos and all thethings.
But, real quick, where can theyfind you?
(45:45):
On social media?
Social media YouTube is if youwant to go deeper into any of
these topics that we've talkedabout.
So it's just Jamie Troll onYouTube.
It's Troll with a U, not an ONice.
And if you are on Instagram,again, I'm pretty much
everywhere as Jamie Troll.
And then also come on into ourFacebook group.
I was talking about that alittle bit earlier.
(46:06):
It's called Financial Literacyfor Women Business Owners.
It's a totally free group.
A lot of great conversationsaround finances are over there
as well.
Yes, we'd love to see you inthere.
And well, that's a wrap.
That is our end of year taxplanning and MakerKid a
millionaire episode.
We are getting close to the endof the year here and this was
the perfect timing to talk aboutsomething like this.
(46:28):
If you're listening and youfound this super helpful, go
ahead and subscribe, rate andreview the podcast.
Make sure that you join Jamie'sgroup.
Again, the show notes will haveall the links.
Thank you so much for listeningtoday and we'll see you in the
next episode.
Bye, bye, honey.
So you want to launch a subscription box and don't
know where to start?
Girl, you are in the rightplace.
I'm Julie Ball and I'm ReneeGonzalez, your host here at
Subscription Box Basics, apodcast for new and aspiring
subscription box entrepreneurswanting to avoid overwhelm.
So grab a coffee, some pen andpaper and let's have some fun.
(00:21):
Hey everybody, and welcome backto Subscription Box Basics.
Today I have a special guest, myfriend Jamie Troll, who is a
financial literacy coach andprofit strategist.
I know that's a mouthful, butshe has got so much good advice
for you.
So listen up, grab your pen andpaper, because we're going to
talk about end of year taxplanning.
(00:42):
So sexy, I know, jamie.
Welcome to the podcast.
Thanks, I think everybody justtuned out.
They were like no, not for me,I'm going to skip this one.
Stay around, do not skip thisone Like this one could have
major implications in yourbusiness.
Real quick story before westart.
I remember the first year in mysubscription box business.
(01:03):
I did not have someone like youin my corner and I was actually
in the process of switchingaccountants and a lot of things
fell through the cracks duringthat time and, for the first
time ever, I had a decentlylarge tax bill to pay.
It was five thousand dollars,and I was like I don't have five
(01:24):
thousand dollars in my backpocket.
So that's why it's so importantto plan ahead and to get
yourself organized, and that'swhy Jamie's here.
All right, jamie.
So some of our listeners willbe meeting you for the first
time, so why don't you give thema little bit of background?
So I'm Jamie Troll.
I was a CPA in what I considera former life.
I'm still a CPA, but I don'tpractice and I don't usually
(01:46):
like throwing around the letters.
I like financial or profitstrategist is my favorite title
that I like to go by now, but Iworked in the corporate world
for a long time for Coca Cola,one of the biggest brands in the
world, and after having kidsand going through that whole
rigmarole that maybe a lot ofyour listeners had as well, I
(02:07):
discovered that the corporatelife wasn't right for me and
decided to strike out on my own,and I'd love to say that I had
some grand plan for what thisbusiness was going to be, but
let me tell you I had literallyno idea.
This is 2017 and I'm like Idon't know what I'm going to do,
but I just started working withsome small businesses in my
(02:29):
area and then that grew and grewand I found that I loved kind
of the strategic side offinances a little bit more than
the CPA boring stuff, and so Iswitched my business to being
just CFO services and theneventually ended up down the
line of becoming an educator,because I realized that there's
(02:51):
just a hole in education.
I really think, with reallyaccessible financial education
for small business owners.
There's just not a lot of it,right, and so I think it leaves
a lot of people just feelingconfused, feeling overwhelmed,
feeling like they're missingsomething Right, and that's what
I really wanted to feel.
And it also helped me to beable to stay at home with my two
(03:12):
kiddos, who are currently nineand six, and that was really
important to me too.
So it really has becomesomething I never could have
dreamed of.
I've been able to grow my teamand this business has just
really evolved over time tobecome it's a labor of love.
I feel the aren't all smallbusinesses.
I swear they really are.
Yeah, they are.
I've been following you foryears now, but we tell the quick
(03:37):
story of I feel like a lot ofsubscription boxes or just small
businesses happen by accident,like something just happens,
where it's like this eitherlight bulb moment or based off
of something that we are goingthrough as the business owner.
Now take us back to thepandemic and the whirlwind of
things happening.
And you started a Facebookgroup.
(03:57):
Tell that quick story.
Yeah, so that was crazy.
And that's when the trajectoryjust went off the charts, which
at the time I was not at allready for.
Remember, we talked about thisand you were just like this is
going out of control.
It was like it was drinking outof a fire hose.
When the whole world was shutdown, I felt like I was in
overdrive, but I had already.
(04:18):
I had started teaching and Iactually just finished up my
first course launch and I waslike, ok, I'm going to take a
little bit of time to regroup alittle bit.
And then the world shut down.
I'm like, ok, well, maybe I'lldo some like organizational
projects.
And I had already offloadedmost of my one to one clients at
that point because I knew Ireally wanted to pursue just the
education, courses, tools,things like that, resources for
(04:41):
small business owners.
And then Everything shut downand then all the new things
coming out from the federalgovernment around the cares act
and the PPP loans and the idealoans and all these acronyms
that didn't exist Three yearsago, right, are now a part of
our daily vernacular.
(05:02):
And at that point in time I gota lot of questions.
I had started a Facebook group,probably about nine months
earlier.
That was pretty engaged, butnobody wanted to hear about
profit strategy anymore, right.
When your business is closed,you're not like, oh, let me hear
about how to increase my profitmargins.
I don't have profit margins, Iam not making any money right
(05:23):
now, right, and I really justleaned into the moment.
And I think that's one of thebig learnings I had is,
sometimes you just have to leaninto the moment and just say, ok
, what does this require of meright now?
And so I was live pretty muchdaily for about six months.
As things were changing soquickly and there wasn't a lot
(05:43):
of information, you couldn't goto YouTube and search up
anything about PPP loans.
I was like, well, I'll juststart a YouTube channel.
And so it just grew really fastand we ended up growing.
I think my Facebook group hadmaybe 5,000 members in it before
the pandemic and we hit 30,000within a couple of months, and
(06:03):
that was by no marketing, noadvertising.
It was just people invitingfriends, and we grew a YouTube
channel from zero to like 20,000followers in a month and a half
.
So it just people wereresponding, so I just kept
showing up and doing that.
It feels like a little bit of afever dream now looking.
That's funny.
Well, all of COVID feels thatway.
(06:25):
You were providing really goodinformation and you're really
relatable.
You were very helpful and thoseare the things that any small
business owner needs to do.
Now, from a timing perspective,the education that you were
providing the live videos andstuff was very timely.
People needed this informationquickly and so I think you did
(06:47):
such a great job.
But here we are several yearslater and you're still a course
creator and teacher and you'rehelping small businesses.
So I love your kind of storybehind the scenes.
It almost feels like anaccident that you started this
business and grew it to whereyou're at now, but I'm super
proud of you.
I know I just love to see thisgrowth.
(07:09):
So let's dive into some taxplanning stuff Now.
Before we jumped on thispodcast episode, you and I were
chatting and you said I like tolook at tax planning in two
different perspectives.
Let's tell everyone that.
So they wrap their heads aroundthat, yeah, absolutely, and I
think oftentimes it.
And when we first are startinga business, too, we think of
(07:30):
taxes as really this complianceexercise, ie the thing that we
have to do, right that, oh mygosh, I have to get my books
ready for taxes, I have tofigure out my revenue and my
expenses and my deductions anddo all of this work and make
sure that I've trackedeverything and that I'm not
going to get in trouble with theIRS.
That's usually like our bigconcern and that's one way to
(07:53):
look at our numbers in ourbusiness is we have to do this
for tax purposes because wedon't want to get in trouble.
But then the other side ofthings and this is what I love
to teach on the most is thestrategy part of it, which is
really the things you get to do,the information that your
numbers give you.
If you have your numbers, ifyou're keeping up with them, not
(08:14):
only are you going to be readyfor taxes, but you're also going
to have the information to know, like how is my business really
doing?
What changes do I need to make?
You're going to have real-timeinformation to make those
decisions, to know what yourprofit margins are, which in a
subscription box business, isperhaps a freaking, lutely
critical right.
It's very easy I'm sure Julieknows this.
It's very easy to work for nomoney or less than no money
(08:37):
right To lose money in thebusiness, and so you have to be
so on top of things.
But that's more the strategyside.
So I think all of that, inorder to be successful both on
the compliance side and thestrategy side, it means having
your numbers together andorganized in a way that you can
look at them and understand whatthey're telling you and make
decisions right.
So that's a good segue intolet's give them some good advice
(09:02):
here.
Let's talk about organizing.
I feel like every year I alwayshave a meeting with my
accountant in Q4, and then shewaits for me to send all my tax
documents and all my information, and I always feel like I carve
out a day and then I pulleverything together and put it
in a pretty little bow for herand I send it off, and then I
(09:23):
hold my breath and I'm like letthe head ins wait to see what
she has to say, and I rememberyears and years where I would
take a picture of my tax daylike my tax organizing day, and
I just had papers everywhere,all over the floor and I'd have
post-it notes and I keptthinking to myself there's got
to be a better way to do this.
So give us some of your tips onyear-end tax planning and
(09:47):
getting organized for it.
And I first want to humanizeand say literally no one is
fully organized.
So if you're in that place of,I never feel organized.
I always feel like things arecrazy.
Even the best of us who do thisfor a job my own taxes I still
have scramble days.
(10:07):
Most of the time I have thethings I need in place, but I
still am like, oh shoot, I gotto pull those receipts and make
sure that I have those ready andhandy.
So don't ever.
I always want to make surepeople don't feel that shame,
because shame keeps us frommaking change right.
It sometimes allows us.
Well, I don't want to feel that, so I'll just hide my head in
(10:28):
the sand a little bit and maybeit'll go away.
And unfortunately, with taxes,as much as I wish one day we
would wake up and they weren'ton a thing, they are always
going to be a thing and forsmall business owners they are
always going to be a thorn inthe side, even if you are
organized and prepared.
But what we can do right is notlet perfect be the enemy of
good.
Don't think I need it's perfectsystem.
(10:49):
That's going to make it justautopilot and easy.
There are things we can do tomake it easier.
That's the goal is easier.
So I think, if you're in this iscoming out towards the end of
the year, that this is the time.
The big thing to wait, one ofthe big things for organization
is don't wait until January,february, march, april.
(11:10):
My friends yeah, I was going tosay the day before they're due
To start this process becauseagain, it's going to make it
less of.
We want to make it not so muchof a tizzy.
You're going to miss things.
You're going to miss things.
If it's a tizzy.
You're going to miss deductions.
You're going to miss importantdocuments that you need.
That's just the way the worldworks, right, when we're rushing
(11:34):
on something, it's not going tobe as good of quality as if we
take our time with it a littlebit.
I also think we're walking intoplanning season for the next
year If we look at getting ourtax.
If you're just looking at it, Igot to do this for taxes.
You might wait till April,right?
But if you're looking at this,as this is really helpful
(11:54):
information for me to be able toplan a successful next year,
then use that as the motivationto get started getting things
together.
That is going to be a much morepowerful motivation.
That is way more exciting.
That's what I do.
I have to trick myselfpsychologically and say no, no,
I'm doing this because I want toplan next year's best year ever
(12:14):
Our goals and everyone lovesdoing goals and high level
things but we also need to start.
You can't walk in to do goalsetting until you've looked at
the past year.
You want to jump into next yearand be like let's not think
about this year, let's go tonext year.
But there's so much gold andincredible information in your
numbers for this year.
(12:34):
Even if you don't know exactlywhat you're looking at, you're
going to be able to draw andthings from it.
You're going to be able to havesome aha moments, as we call
them, where you'll be like, oh,I didn't think about that or oh,
I want to dig into this more.
That's going to really help youto see, okay, what's going well
, what do I need to change?
Reflecting back on okay, say,april was a really good month,
(13:01):
but why?
You wouldn't even know Aprilwas a good month unless you look
back at those numbers, andthat's another thing.
For Texas, you only need annualnumbers.
For making strategic decisions.
Those monthly numbers are socritical.
So I always have a monthly P&Lthat I'm looking at, because
that's the thing.
If you're looking at numbers ina vacuum, they don't mean
(13:22):
anything.
But when you're comparing them,when you have that comparative
period to say, okay, I'mcomparing this time versus last
month, or this month versus thesame month last year, that's
going to give you way moreinformation.
You're going to be able to drawa lot more thoughts and things
to dig into from that and get alot more useful observations.
(13:45):
So again, I think people arelike I don't know what I'm
looking at when I'm looking atmy P&L, but I don't even know
what I'm looking at.
Well, if you just look at itcompared to another one, it'll
give you a lot of those oh waita second, why were expenses up
here?
Why was revenue up here?
What was going on then?
And you could see and reallydraw those conclusions.
So I do think that reflectingtime period is so critical to
(14:09):
being able to walk forward andtruly plan a year and have some
actual meat and potatoes behindwhat you're doing and not just
have these airy.
We made $200,000 last year butwe're going to make $2 million
next year, right, well, how areyou going to get there?
Wow, yeah, exactly.
And I think, as it relates tosubscription boxes, unless you
(14:30):
have a replenishment style boxwhere you're sending the same
thing every month, you can lookat your product budget each
month.
You're curating a unique set ofproducts almost every month or
every quarter, whatever yourcadence is.
And so if you could look backand be like I was really
profitable in January because Inailed my product budget, but in
(14:51):
February I put in one more itembecause I felt like I needed to
put more in there and youbusted your product budget.
You over-purchased too muchstuff.
That'll be clear in thosenumbers.
But unless you take a minute tolook back at that stuff, then
it's pie in the sky.
Like you said, you can't justthrow a goal out there and not
(15:13):
have a plan to get it.
What do they say?
Plan the work, work the plan.
Okay, let's continue organizing, keep us going.
Yeah, I think if you need toget organized, there's so many
different ways to do that.
I just want to give peoplepermission to find a way that
works for them.
A lot of people will push theirsoftware their thing or whatever
, and for some people, somethinglike QuickBooks Online is a
(15:35):
great thing.
For some people, that isabsolutely not.
For some people, getting abookkeeper makes sense,
especially as you are growing.
If you know that's somethingyou're going to put off right.
If you know it, then getting abookkeeper who can handle this
stuff, that you will just beable to get the output right,
like the information you can usefor strategic purposes, and you
don't have to worry about allthe compliance stuff right, the
(15:56):
categorizing expenses anddealing with invoices all of
that they are handling that canbe a great thing for some people
, especially as you grow.
Okay, before you move on,there's a lot of newbies
listening.
What does it mean when someonesays I have to do my books?
Yes, okay.
So the biggest thing with doingyour books is really.
I like to think of it more froman output perspective, because
(16:18):
that's what you want is onbackside of things, what you're
going to want to have is aprofit and loss statement that
shows you and really all theprofit and loss statement.
I think it sounds fancy, butall it really is showing you
what money came in and whatmoney went in.
And yes, there are some likeweird fancy adjustments that
accountants will do for taxpurposes only, but honestly, it
(16:41):
really jibes with how you thinkabout your business and there
can be some timing things andstuff, but ultimately I like to
just think about it.
At least my P&L is mostly justcash that came in, minus cash
that went out.
Related to the business equalsmy total profit.
That's the most important thingto be getting out of doing your
books right, and ultimately youwant to ensure the accuracy of
(17:05):
that, and so what a bookkeeperwill also do is make sure
they're reconciling your bankaccounts right, and that just
means that, okay, that gives memore confidence that my P&L is
correct, I'm not missinganything, I'm not doubling
revenue somehow, I'm not messingthat up.
And then depending and in thiskind of business you likely
would have a balance sheet aswell that would be part of your
(17:27):
books, but that's not somethingthat actually gets filed for
taxes.
It's really more for you tohave that's if you have
significant assets in yourbusiness, if you have
significant liabilities, assetsbeing potentially inventory.
Right, it's inventory.
Yeah, if you're keepinginventory, that's a balance
sheet item.
That's not something.
Ultimately, you can't writethat off until you sell it
technically, and so that's whyit just sits on this balance
(17:50):
sheet with just like purgatory Ilike to think of it as P&L
purgatory like it's not quitethere yet.
We're just going to sit it overhere and eventually it'll
probably make its way to the P&Lat some point.
So that's how I like to thinkabout when we're talking about
what is doing your books.
It's really just making surethat you have an accurate profit
(18:12):
and loss statement and thenpotentially also an accurate
balance sheet.
Okay, perfect, that's so superhelpful, because you hear that
thrown around all the time andit took me a while starting my
business to really know whatthat means.
And then, when I was ready tohire out anytime I hire out I
want to know the basics of howto do what I'm hiring you to do.
(18:33):
Yes, I totally agree, becauseyou don't know if they're doing
it a good job unless you've atleast done it yourself for a
little bit.
Right, exactly, yeah, I learneda little bit of that.
I think I want to givepermission to people to start
easy right, and one example ofthat is you can use a
spreadsheet at the beginning ofyour business.
(18:55):
Now, eventually, you're probablygoing to want something that
has a little bit morecapabilities and it'll also give
you better reports and thingslike that to help you make
decisions.
But in the beginning, if you'vegot expenses, make sure you're
tracking those, and that mightjust be on a spreadsheet, right,
and I even have one.
I'll have Julie link to it downbelow but you don't have to buy
QuickBooks for 40 bucks a monthAt this point in time.
(19:17):
You can buy a cheap spreadsheetand use it for as long as you
want to, until it becomes timethat, okay, now I need a more
fulsome system, but that'll giveyou a profit and loss statement
right.
There are tools that allow youto do that.
You know what I like aboutmanually using a spreadsheet,
too, is that you're looking atthe numbers, you're typing in
the numbers, and so it helps youget a finger on the pulse of
(19:39):
your business, which I think isimportant at the beginning,
especially because you need tounderstand what's going in,
what's coming out.
Now I did end up gettingQuickBooks online and I did hire
an accountant and her team tohelp me with that stuff, but not
that first year.
I was in there on a weeklybasis updating that so that I
knew In my boot camp.
(20:01):
I've got a planning spreadsheetthat helps you stick to your
product budget, each box andstuff like that, and it gives
you a big picture overview.
But I tracked it on a verybasic P&L spreadsheet to start
with.
Yeah, and I'm a spreadsheetnerd, I love a good spreadsheet.
It's one of the things we makea lot of worksheets in our
programs and also that we justsell kind of one off because
(20:23):
they're really helpful.
But I love to create somethingyou can create.
Our P&L template has dashboardsthat you put the.
It'll take 15 minutes a monthto do this one right and then
you have a monthly P&L.
Now you have dashboards withlike a graph of your top five
expenses.
You have all of that so thatyou can see it and really be
(20:46):
able to make decisions right.
But you don't need to have afancy software for that.
I love it Like Excel does allof these things.
We'll put that link in the shownotes then.
Yes, yes, okay, perfect, shouldwe move on to everyone's
favorite topic write-offs.
Let's do it.
Yes, this is the most fun part.
Okay, talk about what arewrite-offs, and I think the
(21:09):
technical term is deductions,right?
Yes, yeah, tell us what thoseare and then give us some tips
and strategy around that.
It always makes me think aboutthe Schitt's Creek that, seeing
it with David, and they're likeit's a red dog, right, I feel
like I use for it.
So I think that the importantthing to know when we're talking
(21:30):
about tax deductions is and Ithink one of the things in our
heads and I even do this as abusiness I'm like I don't make
decisions the same way whenthey're business deductions, I'm
like, oh, it's a deduction, oh,it's a deduction, right, but
it's free money, I'm sure.
Right, I know it's important toknow.
Right, don't go on a shoppingspree.
Yeah, right, and I do it.
(21:52):
It's more akin to getting, let'ssay, 20% off or 25% off of
something, right, that's what Iwould think of a deduction as,
because what it's doing is it'sreducing the amount that you
need to pay taxes on.
So you're paying taxes, not onthe amount that comes into your
business.
Thankfully, because there arebusiness expenses and the IRS
knows that.
So what you're really payingtaxes on is that revenue minus
(22:15):
those deductible businessexpenses which, truth be told,
for the vast majority ofexpenses that truly relate to
your business, they aredeductible.
There's only a few handful ofthings that maybe there's
special rules around.
But if you're truly doingsomething for your business,
it's probably a deduction, oryou could make the case for it
to be a deduction.
Okay, and so that profit amountis what you're taxed on.
(22:39):
So when you have a taxdeduction, it's reducing the
profit amount that you're beingtaxed on, right?
So if it's not like you justget the money back in taxes, but
a portion of it you get back,it reduces your taxes.
So I like to call it like 20 to25% discount is more the way to
think about deductions.
But again, the other thing tothink about with deductions is
(23:01):
okay, is this really somethingthat's going to help me?
Is this going to be aninvestment?
So I think a lot of timestowards the end of the year we
get a little deduction happy,typically when we know
especially for any year businesswhere we've generated maybe
more than we thought, maybe wehaven't paid it into doing our
quarterly estimated taxes theway that we should and we know
(23:23):
we have a big tax bill, likeJulie you were talking about.
Oh my gosh, I owe $5,000.
That typically happens in thefirst year of like, when your
business kind of has that bigtrajectory upward Right, because
in the past, like the firstyear, you may have to really
worry about taxes because yourdeductions may match your
revenue, right, and so we're notworried about it.
(23:43):
And then we just don't thinkabout it.
And then the first year thatyou see that increase in profit
and you haven't really thoughtabout the tax impact, that's
when it comes back and ithappens to, I would say, 80% of
business owners.
I talk to have this like oh mygosh, you make it feel better.
Yeah, it really is, becauseyou're like oh my gosh, I knew
(24:04):
what taxes, but I didn't reallythink about it.
But if you're listening to this, it's not going to happen to
you because you have all thisbad attitude, exactly, so it
doesn't matter where you are.
Yeah, well, after that firsttime, you I mean I only have to
learn the hard way one time whenit comes to something like that
.
After that, every single month,I had a business checking or a
business savings account that Iwould just drop some money in
(24:27):
there, based off of what ourprofit was that month Exactly,
and that's exactly what Irecommend to do.
I have a whole profit planwhere, basically, it's just
taking the profit in yourbusiness and allocating it into
different buckets.
Some people use like profitfirst.
We have our own kind ofmethodology for that but
ultimately you need to beputting aside money all year
long for taxes and either payingyour estimated taxes or even if
(24:49):
you wait until the end of theyear, like you are going to want
to have that money readilyavailable because otherwise
you're going to be like, well,that money's long gone.
Where am I supposed to come upwith this?
And it happens so often withbusiness owners.
So I want to make sure thatpeople really think about that
and they're being mindful ofwhat that looks like.
(25:09):
Even if you're early on yourbusiness and you're like I don't
have to worry about this yetyou will, and so I don't want
you to have to like learn thehard way, right, just start
putting that money aside.
And the great thing is here's.
What I love about doing is so Itend to over put money aside,
like I will put a little bitmore than I think I actually
need and you can work with a CPAif you want to get really close
(25:32):
to that.
Or you can pick a percentageand that will depend on a lot of
different factors, but Itypically say 20 to 30% in your
business is a good amount ofprofit, not revenue profit to
put aside If you're in a hightax area like California, new
York, maybe a little more thanthat.
I'm in a state with no incometax, so mine's on the lower end,
(25:52):
so it really depends on that.
But the great thing is when yougo to file your taxes and
you're like okay, sometimes I dohave a big bill right, I might
have a bill that's $5,000.
And I'm like but I had seven inthat account and so it feels
like getting a refund eventhough I'm paying $5,000,.
I'm like you know what I'mgonna get to now release that
$2,000 or roll it in next yearor something.
(26:15):
But it feels like you'regetting an instant refund when
you have it prepared and sittingthere.
It's just it's such apsychological game You're paying
the same amount as you wouldotherwise, but you're thinking
about it completely differently.
I agree, when I can, I do thesame thing and I like to think
of it as a moving target Becausea lot of different things
happen throughout the year.
(26:37):
We can look back at the COVIDyears and see all the different
things.
We didn't know there was goingto be PPP loans.
We didn't know there was goingto be other opportunities.
Again, it's a moving target.
And then for the subscriptionbox world, for the majority of
our students and the boxes thatI've seen and known along
through the years, like May,june, july, especially June and
(26:59):
July man, it's such a it's wecall it the summer slump.
You're just not going toexperience as much revenue or
profit in the summer monthsunless you sell some sort of
like summer product, yes, likethe natural kind of seasonality,
yeah, the seasonality of it.
And so that's why I like tothink of it as a moving target.
(27:19):
I don't, I didn't put in thesame amount every single month.
It was based off of okay, howmuch profit did we make this
month Exactly?
And that's how you should do it.
And that's also one of thethings that I have people save
for, especially in a seasonalbusiness like that.
Mine is the same way.
We have a couple of launchesthat bring in more than half of
our revenue in a year, right intwo months, but I can't just say
(27:42):
, well, I'm just going to paymyself a whole bunch more
because I have a team now and Idon't want to get to July and
not have enough money sittingfor payroll.
Right, that will never happen.
My team will never not havepayroll.
I'm never going to be in thatsituation.
So that means that I also put alot of money aside, and there
are different bank accounts youcan use for this in case like.
(28:02):
One thing I also want to say andthis might be a good time to
plug it is make sure you have abusiness bank account, even if
it's just expenses, like you canput your own money in and pay
expenses out of it, but it'sgoing to help you stay more
organized.
So I highly recommend thatthere's one like Novo and Relay,
which are great.
They're free and they allow youthis opportunity to put money
into different buckets.
So that's what I really like.
(28:23):
Yeah, they have reserveaccounts where you can put money
into those different buckets.
I have one of each Novo, andthey're both banking platforms,
so they partner with an FDIC andShared Bank, but they have this
great ability where you can putmoney aside for taxes.
You can put money aside foryour rainy day fund.
You can put money aside toreinvest later into your
business.
(28:45):
You have all these kind ofdifferent, almost like the
envelope method for business,right?
Oh, I love that, yeah, and itmakes it so much easier because
you can just put it away andyou're like okay, now I won't
spend that because it's not inmy like spendable balance, right
, like it allows us to reallybudget, not on like a line item
basis, because I hate that, buton an overall basis.
We have a, we know how muchmoney we have and we know what
(29:06):
we can afford, which is sohelpful, I think, too Super
smart.
Yeah, make sure you do that ifyou don't have a business bank
account.
We're coming up to the end ofthe year.
It's really good to get starteda new year with a business bank
account.
And then, even at the otherthing I wanted to say on the
deductions piece, a lot ofpeople early on in business,
they have expenses before theyhave revenue and they don't.
(29:29):
They're like what am I supposedto do with this for taxes,
right?
What do I do?
Well, you can still write thoseoff for the most part, right?
So you and that can offset anyother income that you have,
right?
So if you have a job, or yourspouse has a job or something,
the expenses in your business,even if you're not making
(29:51):
revenue yet, can offset some ofthose charges.
So that's something to know isdon't just be like, oh, never
mind, I'm just not going toworry about it, right?
If you get $2,000 worth ofexpenses, you can deduct that as
startup costs typically fromyour business and you don't.
That's, that's an extra.
Using 25%, that's a $500 taxsavings because you didn't just
(30:12):
like, say no thanks, I'm notgoing to deal with it, right?
So, even if you're a part ofJulie's membership, right,
that's something that you canwrite off.
I'm just going to say that let'splay a game.
I'm going to name an expense ina subscription box business and
you say yes or no if it's awrite off and then if it's a
(30:34):
gray area, just give us a littlebit of context around that and
I will go.
Disclaimer here I am a CPA, butI'm not your CPA.
Perfect To all listening.
Disclaimer Check with your CPAfor specific details because it
can vary.
But go ahead, julie, let's doit.
So, in general, ok, thephysical boxes that you're going
to send Absolutely yeah Aplastic and sold Postage?
(30:57):
Yep, absolutely OK.
Crankle cut yeah, ok.
Anything you're putting in thatbox, it's going to be a
deduction, ok.
Laptop, yes, I would say with alaptop, one of the things to
keep in mind is you may be ableto deduct it all in one year.
You may put it on your balancesheet as an asset and depreciate
it, but in general, if you'reusing it primarily for work,
(31:20):
usually, yes, you do want todocument that With anything,
especially something that couldbe gray area could be deduction.
It could be personal makingsure you have a documentation
either within your QuickBooks orjust it can be literally a Word
document that you save on yourcomputer and you remember where
it is and you save it in yourtaxes file so you have an
explanation of what those are.
(31:41):
Yep, ok, a template like yourP&L template, for sure.
A course like Subscription Box,bootcamp, for sure.
If it's related to what you'retrying to do, then that is
definitely.
That's considered education, andone of the things I'll say here
is the words the IRS uses fordeductions are ordinary and
(32:01):
necessary, but interestingly,the necessary is the piece that
feels like really well, is thisreally necessary?
The way that they definenecessary is do most business.
Is this normal for the business, right?
So it's not like necessary,like I have to have this or my
business can't run, and I thinkthat's where people get confused
(32:22):
.
I don't know Got it.
It's like the IRS doesn'tactually know the definition of
necessary because they make uptheir own and I'm like maybe
it's a different word, we have awhole dictionary for that.
But in general, if we can justsay this is normal in our
business, it's related to ourbusiness, here's how it's
related, and if it is somethingthat is in the middle and all
having that documentation can bereally helpful.
(32:42):
I've gone to conferences.
That was my next one.
Conferences, yeah, conferencesare one that are really
important to document, to havesomething to say keep the agenda
, maybe have some notes in thereabout how you're planning to
use some of this in yourbusiness, because in general and
nothing's ever a guarantee theIRS can always come back and say
, no, I don't agree with you andyou'll be like, ok, well, fine,
(33:04):
but I think that a lot of timesthere's more that can qualify
than we think.
And so I would say just reallybe thinking about.
There's a portion of your cellphone bill most of the time is
going to be, and you don't haveto get.
Obviously cell phone billsaren't the way they used to be,
where you were charged per calland you could go through.
The laws are written so weirdas if we're supposed to know
(33:28):
what percentage.
We use our phone for businesspurposes.
No, I'm moving the hell nose,but as long as you come up with
some kind of reasonablemethodology, they're going to be
like OK, seems correct, Ideduct a portion of our internet
bill.
I want to mileage on your carthat you're using for business.
If you're driving back andforth to that post office track,
(33:49):
that Love that.
What about your office?
Yes, your home office can counttoo, and that one gets a little
tricky sometimes becausethere's a couple different ways
to come up with a home officededuction and you do need to
make sure it's used exclusivelyfor business.
So if you're working out ofyour living room, and that's not
going to count, but if you havea specific place that is used
for your business and yourbusiness only, then that is
(34:13):
going to be a write off and,depending on how you get to,
that number can depend on do yourent, do you buy and there can
be some complications there.
To talk to your cat yeah, talkto your cat on that.
And don't believe the fact thatthere's this weird I don't know
where this rumor came from.
If you take the home officededuction, it's an audit red
(34:33):
flag.
That is not true at all.
But no, yeah, so don't worrythat.
Oh, and they're going to auditme If I have a home office
deduction.
First of all, audit isn't theworst thing in the world.
I think there's just that scaryooh audit.
But second of all, it reallydoesn't.
That's a very normal deductionto take, so don't feel like you
(34:54):
can't, and definitely talk to aCPA on that one.
So, buying cars and home officededuction, those are good
topics to talk to a CPA onbefore you do anything with them
, because there can be longerterm consequences to whatever
you decide to do this year.
But yeah, so just that thoseare good to have conversations
to get the full picture.
But overall, yes, those wouldbe deductible business expenses.
(35:18):
Every year my accountant asks meOK, where did you do your
business this year?
Where did you run it out ofexclusively?
And so I would give her thesquare footage of my office and
then, when we were running ourwarehouse from home.
We ran it out of a two cargarage, but we didn't use it for
anything else, we didn't use itfor cars, it was exclusively
for the business.
(35:39):
So I would give her the squarefootage of that as well.
So, yeah, that's a really yeah,ok, a couple more.
You hire a contract worker to doyour social media for you?
Definitely OK.
What about if you hire anaccountant?
Absolutely, that's all right,absolutely Right.
Yep, now I will say in theorywell, I'll say this In theory
(35:59):
your accountant, if they're alsodoing your personal taxes, only
a portion would be deductiblethere.
But I argue typically becausenow, especially because we don't
have outside jobs, all of ourpersonal taxes are pretty much
our business.
Again, there's some of thatgray area.
And if you wanted to deduct thewhole thing and just be like,
no, I'm not going to deal withpulling this apart, a lot of
(36:21):
people do that, I'll say that,and this is a donut, but a lot
of people do that, and this is agood place to put that
disclaimer again.
Ask your accountant, becauseyour accountant, different
accountants, have differentlevels of comfortability too.
Right, they're veryconservative accountants and
they're very Maybe it is liberal, not politically, but just in
terms of what they'recomfortable with, and so asking
(36:44):
the person prepping your taxeswhat they think is really
helpful.
Okay, okay, that was a fun game.
Thank you for playing.
I like it.
That was fun.
Let's wrap this up.
I know you have a favorite taxstrategy that so many of us mom
entrepreneurs need to know aboutbut often overlook.
Will you tell us about that one?
(37:04):
Absolutely, I think it's myabsolute favorite and I finally
got a chance to put this intopractice this year myself.
I love the tax strategy ofhiring your kids and a lot of
people.
There's a lot of misinformationin this world of hiring your
kids, but for most people owntheir business fully right.
(37:25):
If you are a 100% owner in yourbusiness, most people can hire
their children at any age towork in their business.
Now they actually have to workright, and that work can be
marketing related.
My son comes on my YouTubechannel and I pay him for that,
and I pay him good money becausehe's making it.
It's a video recording.
It's marketing for me, so I cango out there and see okay, if
(37:48):
my kid was going to be in acommercial, what would I pay
them to be in that commercialand I pay him for different
admin duties and things likethat.
But as long as you pay them,commiserate with what you would
pay somebody else for the samelevel of work, right.
And you can get that through alot of different means, by
searching online for jobpostings and things like that,
and it's reasonable and you'retracking it.
(38:08):
Well.
You can pay your kids.
You get the deduction for thatright.
Your kid on the other side hastypically, depending on their
age, but usually if they'reunder 18, they and you do it.
You send it up correctly.
I'll caveat that as well.
They will have no taxes to pay,especially if they are making
under the standard deduction.
So I think it's 13,000, Ishouldn't have looked at it up,
(38:29):
but I think it's almost $14,000.
So if you pay them less than$14,000 in a year, there will be
no income taxes, no socialsecurity taxes, no Medicare
taxes, no unemployment taxes,any of that.
It changes as they get between18 and 21.
Some of that rolls off and then21 and up, unfortunately, the
benefits typically roll off, butyou can pay them.
They have no taxes.
(38:50):
So you're basically shiftingyour income from your tax
bracket to theirs and I know alot of people that now, instead
of they let their kids, then themoney that they spend on their
kids sports comes out of thatmoney, right?
Oh wow, so money you wouldotherwise be spending anyway,
you could pay out of that money.
So my son gets the majority.
Well, he gets some of the moneythat I pay him, but he's nine.
(39:11):
He doesn't need all that moneyright now.
So what I do with it is I alsouse that money to put into a
Roth IRA on his behalf.
So that's the other great thingyou can do.
You have to have earned incometo put money into a Roth IRA.
And just putting a couplethousand dollars into his Roth
(39:32):
IRA right Each and every yearuntil he's 18, he will have on
average, probably two to $3million when he retires in that
Roth IRA.
Oh my gosh, yeah, so it's my.
Make your kid a millionaire theeasy way, right?
It's all about the time valueof money, and that is one of the
lessons I learned when I wasreally young and when people ask
(39:53):
me like, what's the lesson youwant people to know is, the
earlier you start, the better,and if you didn't, you can for
your kid right, you can makethat happen for your kid, where
you let the time value of thatmoney and you just even invest
in index funds or something.
Hashtag, not a financialadvisor either, right.
But as I pick up my jaw fromthe floor hearing those numbers,
(40:18):
I can think of so many thingsthat, as a subscription box
business owner, your kids couldhelp with a million helping
packing the boxes, or even cleanup after a box packing day,
getting all the crinkle cut offthe floor, or there's just so
many things that your kid couldparticipate in.
And so you told me you have aYouTube video that kind of goes
(40:40):
into this a little more in depth, right, yes, I do.
Okay, so we'll definitely linkthat in the show notes, because
this can be complicated.
You can't just pay your kidsunder the table.
Obviously, like you said, youhave to set it up the right way
for it to be like this strategictax plan.
So, yes, we'll definitely makesure we share those details.
This whole conversation has beenfascinating.
(41:00):
I hope that our listeners havetaken notes and that they've
learned a lot from it too,because, again, this can be one
of those topics that feelsoverwhelming, but you have to do
it.
This is part of running abusiness.
Yeah, absolutely.
And again, I think it can bethat switch of okay I'm going to
think about.
(41:21):
I've been thinking about thisfrom this compliance tax
perspective and what if we makethat mindset shift towards oh no
, this is something that I getto do, I get to be strategic.
It's going to help me meetthose big goals I have for this
business in the future if I canreally understand this and dive
in and feel more comfortablewith the number side of my
business, right, yeah, so ifsomeone's listening and they're
(41:44):
like all right, this issomething I need to invest in.
This is something that I needto learn more about.
You've got a program thatteaches this kind of stuff.
Why don't you tell everybodyabout that?
Yeah, for the hiring of kidsspecifically, and I like to make
tools.
I have some broader thingsabout learning the basics of
finances.
That's something Julie can droptoo.
Yeah, all the way up to yourown CFO strategy.
(42:06):
But I also love to make reallytargeted products that are good
for somebody who is trying toimplement something.
Yeah, but it's complicated andit's going to be thousands of
dollars to talk to an accountantand get them to do it.
They might not even be superfamiliar with this.
Our hiring your kids toolkit isour most popular, actually this
(42:27):
year new product that we've putout.
People are loving it.
I just got a sale while we wereon this recording Because I
think it's really resonatingwith a lot of people that are
like, oh, I want to do this.
I want to do it the right way sothat I get the tax deductions.
I don't want to do anythingshady, right, I want to do it
correctly.
And so this gives all thechecklists that you need, all
(42:51):
the what you're going to need tobe able to track it, so that
you have that for the IRS if andwhen you ever are audited
hopefully never, but you neverknow and it also has contracts
to make it legit.
And I think that's somethingthat people miss in all of this
is you don't want to just giveyour kid money and try to deduct
it because you don't have apaper trail.
(43:11):
So how do we make sure we havethe paper trail?
And that's also important ifyou decide you want to go that
extra step to make your kid amillionaire and open that Roth
IRA, which normally theywouldn't be able to do at their
age, but because they haveearned income from you they can.
So you want to do it all theright way.
You don't want to miss out.
I've talked to so many peoplethat did it the wrong way and
they are missing out on so muchin terms of tax savings or
(43:34):
potential earnings in the future.
So I really wanted people tohave all the tools they needed
to be able to do that themselves.
The hiring a kids toolkitdefinitely check out the link
Julie is going to put in there,because I'm so excited about
this product and we've had somany kids that I love seeing
pictures of these kids, thateverybody's hiring and the work
that they're doing in thebusiness.
(43:55):
We even give you ideas.
For if you're wondering, likewhat is my kid actually going to
be able to do, I can tell you.
Even for young kids, there arethings that they can do,
especially in the areas ofmarketing.
If you're taking pictures andputting them on social media for
your business, you could paythem for that Nice, nice.
So there's so manyopportunities.
This is just pure gold.
I feel like that's what weshould name the podcast episode
(44:17):
Make your Kid a Millionaire.
That's a lot sexier than likeend of the tax plan.
Oh, this conversation has beenso great.
Jamie.
Thank you so much for not onlybeing on the podcast today, but
also for being so intentionalabout what you're teaching
everyone, like making your kid amillionaire and the tax
planning strategies and justdemystifying a lot of this
(44:41):
really scary stuff.
It has such a huge rippleeffect across lives.
So, thank you, I reallyappreciate what you do.
Well, thank you and Julie, Iappreciate your support.
You've been part of this wholesquad for a long time.
I remember meeting you a coupleof years ago when we were in
your town for our retreat, forour team your team retreats,
(45:04):
yeah, and so I just appreciateyou as well, and you were
actually, I think, going inSpirkelhussel.
Grow was one of the firstthings that I did.
You reached out and you werelike, do you want to be a part
of this?
And I was like, yeah, let's doit.
So I loved like you really, Ithink, have been a part of this
(45:25):
how this has evolved and changedover time, and so I'm so
appreciative for you too andyour friendship.
Aw, what a little gush festhere we're having, I know right.
So let's wrap it up, jamie,again thank you.
We're going to make sure that weput all of the links in the
show notes so people can checkout your workshops, your course,
your YouTube videos and all thethings.
But, real quick, where can theyfind you?
(45:45):
On social media?
Social media YouTube is if youwant to go deeper into any of
these topics that we've talkedabout.
So it's just Jamie Troll onYouTube.
It's Troll with a U, not an ONice.
And if you are on Instagram,again, I'm pretty much
everywhere as Jamie Troll.
And then also come on into ourFacebook group.
I was talking about that alittle bit earlier.
(46:06):
It's called Financial Literacyfor Women Business Owners.
It's a totally free group.
A lot of great conversationsaround finances are over there
as well.
Yes, we'd love to see you inthere.
And well, that's a wrap.
That is our end of year taxplanning and MakerKid a
millionaire episode.
We are getting close to the endof the year here and this was
the perfect timing to talk aboutsomething like this.
(46:28):
If you're listening and youfound this super helpful, go
ahead and subscribe, rate andreview the podcast.
Make sure that you join Jamie'sgroup.
Again, the show notes will haveall the links.
Thank you so much for listeningtoday and we'll see you in the
next episode.
Bye, bye, honey.
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